“So You’ve Built Your Business on Software Designed Before the Internet Existed?”
ZDNet’s Phil Wainewright, in an especially interesting post, explores the value of SaaS beyond the standard marketing fare of lower cost and faster time-to-live:
Today, I’m at a NetSuite customer event in London and CEO Zach Nelson has just displayed a chart quoting IDC and Gartner data that shows on-demand ERP sales are growing at a rate four times faster than on-premise. OK, that’s from a lower base, but remember too that SaaS vendors book far less each year from each individual deal than their on-premise rivals, which makes their faster revenue growth even more impressive.
So I’m wondering, what’s driving this remarkable growth? Conventional wisdom says that it’s just lower upfront cost and faster time-to-live that’s driving businesses to adopt SaaS, especially in these straightened, cost-conscious times. But there’s another factor that I think is underrated and I’m interested to hear [NetSuite CEO Zach] Nelson emphasize it in his presentation.
“So you’re going to build your business on software that was designed before the Internet existed?” he relates asking a customer in a recent sales call. Increasingly today, business is done in the cloud — with customers, suppliers, employees — and Nelson’s message is that, to participate fully in that medium, business systems have to be in the cloud, too. “Your company is in the cloud,” his presentation concludes.
Interesting perspective, and one that’s difficult to argue at a conceptual level.
Much of modern business leverages the internet/cloud to conduct routine functions, so extrapolating that foundation enterprise applications should use the cloud infrastructure isn’t as giant a leap of faith as some would have you believe. Is there salesmanship here? Of course, and many on-premise ERP champions will be quick to point out the holes in this conclusion. Nonetheless, there’s no denying that cloud apps, once considered early adopter fairy dust, are coming of age very quickly. You can’t browse anywhere these days without SaaS, for better or worse, grabbing some of your attention.
Where will it go from here?
Not away, that’s for sure.
